Opportunities - TetraHydro Solutions - Carbon Credits and Methane Mitigation

Opportunities in Methane Reduction and Well-Remediation

As demand for methane reduction and well-plugging rises alongside the growth of carbon markets, TetraHydro Solutions is well-positioned to capitalize on financial and ecological opportunities. Untreated orphaned wells threaten water quality, soil health, and the environment, yet limited funding hinders action by state governments, federal agencies, and Native American tribes.

Carbon markets now provide financial incentives that boost private, philanthropic, and government-led well-plugging efforts, accelerating greenhouse gas reductions. This creates a unique opportunity for companies like TetraHydro Solutions to secure funding, generate carbon credits, and turn environmental challenges into valuable market solutions.

Untapped opportunity in orphaned wells

The EPA's estimate of up to 3.7 million orphaned U.S. oil and gas wells highlights a major opportunity for well-plugging companies, driven by regulatory focus on methane emissions and sustainability, increasing demand for remediation services and funding.

Federal investment in well plugging

The 2021 Infrastructure Investment and Jobs Act allocated $4.7 billion via the REGROW Act to plug orphaned wells in the U.S., creating opportunities to reduce methane leakage and for companies like TetraHydro Solutions to earn carbon credits.

Methane leakage is a major contributor to U.S. emissions

Methane leaks from abandoned wells contribute 12% of U.S. emissions and a significant portion of global warming, creating a strong market opportunity. Tightening regulations and increased pressure to reduce greenhouse gases offer well remediation companies access to funding for plugging efforts.

High costs of well plugging

A Columbia University report estimates that plugging 500,000 wells—about 15% of the EPA's estimated orphaned wells—could cost up to $24 billion. This creates a lucrative opportunity for well-remediation companies to tap into federal and state funding targeting the abandoned wells crisis.

Strategic Potential of Orphaned Wells in Key States

With 3.7 million abandoned and orphaned wells in the U.S., 65% of which are concentrated in just five states – 40% in Texas, Oklahoma, and Kansas – TetraHydro Solutions recognizes a substantial market opportunity. By targeting these high-density areas for well remediation and leveraging state and federal funding, the company aims to generate carbon credits while addressing environmental concerns.

Voluntary Carbon Credit Market

Market overview (2020)

• Demand Level: In 2020, the demand for voluntary carbon credits
was approximately 0.1 gigatons (GtCO2), reflecting a market size
still in its early growth phase.
• Growth drivers: A rise in the number of companies committing to
climate initiatives like setting net-zero emission targets.

Projected growth by 2030

• Anticipated Demand Surge: Demand is expected to rise 15-fold,
reaching 1.5 to 2.0 GtCO2 annually by 2030.
• Corporate net-zero pledges: In 2019, around 500 companies had
pledged to reach net-zero. This figure doubled to more than 1,000
companies by 2020, demonstrating a significant upward trend in
corporate climate alignment.

Long-term projections by 2050

• Demand Explosion: By 2050, demand could increase up to 100
times, estimated between 7 to 13 GtCO2 per year.
• Climate target influence: This demand surge is driven by the need
for “negative emissions” to align with aggressive climate action,
aiming to limit global warming to 1.5°C to 2.0°C above preindustrial
levels.

Current Market and Future Demand Projections

Key emitting sectors

• Energy: Largest contributor at 73.2% of emissions.
• Industry: Includes steel production (7.2% of emissions), which
relies on high-emission processes.
• High-emission industries: Sectors like road transportation,
commercial energy, and steel are expected to drive carbon credit
demand due to high costs of emissions reductions.

Carbon pricing trends

• Only 21.5% of global emissions are currently covered under
carbon pricing, with an average price of $16 per tonne—far below
the $75 per tonne recommended by the IMF to meet climate targets.
• Companies, however, are internally valuing carbon at around $25
per tonne (CDP survey), signalling a growing recognition of the
need for stronger pricing.

Future outlook for prices

• Rising demand: Increasing carbon prices will push companies
towards carbon credits.
• Projected price surge: High-emission sector’s need for offsets may
drive up credit prices, benefiting compliance and voluntary markets
alike.